Inheritance tax relief could be abolished

The recently created Office of Tax Simplification (OTS) has spend the last weeks picking through the hundreds of different tax reliefs and exemptions that exist under the current UK tax system to create a short-list of those that could be abolished.

The original aim of the process was given as an exercise to remove tax reliefs and exemptions that were "largely historic, not frequently used, create distortions in the tax system or are complex for business or HMRC to administer". The list of possible reliefs to be done away with include the inheritance tax relief applied to potentially exempt transfers (PETs), as well as the 7 year taper rule.

The Capital Gains Tax (CGT) relief for principal private residences is also included in the list for possible reform with the accompanying Treasury paper saying that it should remain but with amendments to the "last three years" provision. CGT reliefs for venture capital trusts, enterprise investment schemes and entrepreneurs are also potentially on the chopping block.

A second list has been issued by the OTS with possible relief abolitions subject to time, but a final list of proposed abolitions and amendments will be presented to the Chancellor prior to the 2011 budget.

If you live in Northern Ireland and require legal advice on an inheritance tax, capital gains tax, or any other tax matter, contact Wilson Nesbitt solicitors in Belfast or Bangor by emailing tax@wilson-nesbitt.com .